New Zealand’s Free Trade Agreement (FTA) with the European Union will come into force on 1 May. So what does this mean for Canterbury businesses?
The EU/NZ FTA is good news for local exporters, opening up a market with a combined population of close to 450 million people who already consume about 6 per cent of our overall exports. Two-way goods and services trade between New Zealand and the EU was worth NZ$20.2 billion in 2022.
The FTA promises immediate tariff eliminations for a range of Canterbury’s exported goods, providing a more equal playing field for exporters. Additionally, the agreement is anticipated to unlock new quota opportunities meaning that Canterbury should be in line to generate hundreds of millions in additional export revenue over the next five to seven years.
Canterbury business Fabrum, a world leader in the supply of small to medium scale liquid hydrogen systems, is just one of many companies that stands to benefit from the NZ-EU FTA. Co-founder and chairman of Fabrum Christopher Boyle says: “any agreement which reduces trade barriers can only be a good thing for us”.
Key export sectors poised to benefit under the NZ-EU FTA from the reduced trade barriers and improved market access include:
- Horticulture: Onions, apples, most seeds and other horticulture products will enter the EU tariff-free from day one
- Fish and seafood: tariffs to be eliminated on day one on almost all fish, and mussels, squid, and other shellfish
- Honey: tariffs to be eliminated on day one for Mānuka honey. All other honey tariffs are to be subsequently eliminated over three years.
- Wine: immediate tariff elimination
- Manufactured products: almost all tariffs eliminated on day one for manufactured products, including plastics, aluminium, organic chemicals and machinery
- Butter: New FTA quota access grows from 5,000 to 15,000 tonnes over seven years, with tariff phased dropping to 5% of the MFN rate over same period in over seven years. WTO quota: 21,000 tonnes drops to 5% of the MFN rate over seven years (and an additional 14,000 tonnes reduces to 30% of the MFN tariff at EIF)
- Cheese: New FTA quota: duty free quota grows from 8,333 to 25,000 tonnes over seven years. WTO quota: duty free access for 6,031 tonnes from EIF, with improved conditions.
- Milk powder: New FTA quota: grows from 5,000 tonnes to 15,000 tonnes over seven years, at 20% of the MFN tariff from EIF
- Beef: New FTA quota: grows from 3,333 to 10,000 tonnes over seven years; 7.5% in-quota tariff at EIF.
- WTO quota: 1,102 tonnes; in-quota tariff reduced from 20% to 7.5% at EIFSheep meat: New FTA quota: 38,000 tonnes carcass weight equivalent, duty free phased over seven years, with 35% of volumes for chilled and 65% for frozen sheep meat. WTO quota: 125,769 tonnes carcass weight equivalent, duty free.
With most tariffs eliminated or reduced by the FTA, these sectors anticipate considerable savings and increased export volumes, fostering economic growth and resilience. The elimination of tariffs and the creation of additional quota access, particularly for products like beef and dairy, offer even greater opportunities for businesses looking to capitalise on this landmark agreement. The FTA also promises benefits for Canterbury consumers, with the elimination of tariffs on EU goods entering the country, translating into significant savings and expanded consumer choices.
In addition, the FTA facilitates easier movement of staff and their families into the European market, streamlining processes, and fostering collaboration across sectors. With provisions for education, professional qualifications recognition, and investment, the agreement lays a solid foundation for bilateral cooperation, ensuring resilience and sustainability in future trade relations.
View the infographic on benefits of the FTA.
Read the latest update from New Zealand Foreign Affairs and Trade.
